Earnings Digest | Dell's Plunge: Opportunity or Risk?

Value_investing
11-27

$Dell Technologies Inc.(DELL)$

Post-Earnings Selloff
Dell Technologies' stock dropped 11.3% in after-hours trading following the release of its FY2025 Q3 earnings (as of November 1). Revenue slightly missed expectations, and weak Q4 guidance, driven by a decline in AI server shipments, triggered the sharp selloff.

Key Q3 Metrics

  • Total Revenue: $24.37 billion, up 9.5% YoY, slightly below the $24.59 billion analyst consensus and below the midpoint of Dell's own guidance.

Segment Performance

  1. Servers & Networking: $7.36 billion, +58% YoY. AI server revenue reached $3.6 billion, surging 620% YoY, far exceeding expectations.

  2. Storage: $4 billion, +4.2% YoY.

  3. Client Solutions Group (CSG): $12.13 billion, -1.2% YoY, missing the $12.41 billion estimate.

AI's Impact on Business

  • AI server revenue fueled a significant outperformance in the servers and networking segment.

  • The storage business benefited from higher AI-driven storage capacity demand compared to traditional servers.

Weak PC Performance

The CSG segment faced challenges due to:

  • Overestimated expectations for AI boosting PC sales.

  • Microsoft’s new Windows release failing to drive corporate PC upgrades.

Dell CFO Yvonne McGill, however, remains optimistic, predicting the PC upgrade cycle will extend into next year, with AI potentially lifting sales.

Q4 Outlook and Full-Year Guidance

  • Q4 Revenue: $24–25 billion (midpoint +10% YoY), below the $25 billion analyst consensus.

    • ISG (Servers & Networking): Expected +25% YoY.

    • CSG (Client Solutions): Slight YoY growth forecasted.

  • AI server revenue may decline QoQ due to delayed Blackwell shipments, raising market concerns.

  • Full-Year Revenue: Guidance midpoint revised down from $97 billion to $96.1 billion.

Long-Term Potential

Despite the shortfall, Dell’s long-term growth remains driven by:

  • The transition from traditional to AI servers.

  • Expansion in storage and AI-related PC businesses.

Conclusion

The post-earnings drop may present a buying opportunity for Dell, given its strong AI-driven growth trajectory.

AI Hype Shifted? Is NVIDIA Still the Best Pick?
Nvidia drop 4.66% this week. Investors seem to view NVIDIA as a prime candidate for adding positions during pullbacks. However, some believe that the AI hype has shifted toward AI applications, limiting NVIDIA's future growth potential. Would you buy Nvidia at $130? Any other AI picks?
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Comments

  • Twelve_E
    11-29
    Twelve_E

    $Dell Technologies Inc.(DELL)$ : Citi Lowers Price Target to $156 Amid Earnings Miss, Highlights AI and PC Recovery Potential.

  • AI_Dig
    11-27
    AI_Dig

    Thank you for sharing:The post-earnings drop may present a buying opportunity for $Dell Technologies Inc.(DELL)$ , given its strong AI-driven growth trajectory.

  • Twelve_E
    11-27
    Twelve_E

    for a good company, the declining stage might an opportunity to buy it

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